Remember when Donna Arduin led the Dunleavy administration’s jihad against public services, attempting to make over a billion dollars in cuts? Well, those cuts are back—cloaked far more cleverly this time behind the facade of a big Permanent Fund dividend. Make no mistake: The Governor’s “50/50” proposal to create a billion dollar deficit is simply a starve-the-beast attempt to force draconian spending cuts. Those of us committed to Alaska’s Constitution must defeat that plan and stop the proposed raid on the Permanent Fund.
Why is this a more clever attempt to eviscerate public services? Because the Governor has framed his mega-dividend proposal around the needs of the poor, and claims he wants to “have a conversation” about revenue. But when you cut through the gauzy rhetoric and look at the numbers, the reality of his proposal is clear: the largest structural deficit in state history, a deficit so large that it could only be closed with cuts so draconian they are almost unimaginable. If the Governor actually wanted a larger dividend that’s sustainable, he would propose new revenue to fund it—of course he has not proposed such revenue and there are not the votes in the legislature to pass it.
Consider how radical the Governor’s plan is. Right now, earnings from the Permanent Fund can sustainably fund core services at the 5% draw rate established by the legislature in 2016. Yes, that is a law, and yes the Governor’s mega-dividend proposal would break the law.
But breaking the law isn’t the least of it. Those Permanent Fund earnings pay for 2/3 of public operations: schools, troopers, infrastructure, Pioneer Homes, public health, ferries. Dunleavy’s plan would cut the funding available in half. If his plan were enacted, the Pioneer Homes, ferries, University of Alaska Anchorage, and countless other institutions would likely be eliminated to close a massive budget gap. Of course that inevitable outcome isn’t what the Governor uses to sell his plan.
The administration disingenuously claims that new revenue will magically appear to pay for his mega dividends. How? A majority of House members are Republicans, and in most districts either income or oil taxes are non-starters. The Senate is even bleaker terrain for meaningful revenue. And you’d need two out of the three of sales, income, and oil taxes to pay for Dunleavy’s dividends. In a legislature that can’t even adjust the gas tax for inflation, do you really think we’d be able to raise well over a billion dollars in revenue when it makes the state’s wealthiest citizens and most politically connected industry pay? It’s possible—and even that possibility gives the oil industry pause—but I think evisceration of core services is far more likely.
The Governor is a cynic. He ran on a mathematically impossible promise of “full” dividends AND back dividends, knowing that promise could not be fulfilled. Now he’s in full re-election mode, trying to bully legislators into funding the “biggest dividend ever” with no concern for any consequences beyond a 2022 election. Mike Dunleavy doesn’t appear to have any concern over the consequences of his actions, so us legislators must. And because of the devastating cuts in services that would result from his mega-dividend proposal, I believe we are obligated to fight like hell against this raid on the Permanent Fund that would put Alaska on a path to poverty.
See you around the neighborhood,